APL taking 4 ships out of U.S.-flag service

Tuesday, April 16, 2013

APL is planning to take four of its U.S.-flag ships out service - the President Adams, President Jackson, President Polk and President Truman — citing reduced need for transport by the U.S. military and the economic slowdown.
“The market place has been under extreme pressure with the wind down of both Iraq and Afghanistan. In addition the United States and world economies have been in a various levels of recession and have been slow to recover. As a result cargo volumes and rates have been depressed,” said Eric Mensing, president and chief executive officer of APL Maritime Ltd., the U.S.-flag arm of liner carrier APL, in a memo obtained by American Shipper.
The four ships are deployed in APL’s SZX service along with four other Singapore-flag ships.
Mensing noted the ships, known as C10 ships, “are our oldest ships and have aged out as far as being efficient and cost effective to operate. This isn’t to say that the crews have not done everything that is expected from professionals in maintaining and operating the vessels. However, as we compete in a market place that is over saturated with new and old tonnage it is hard for the company to justify any capital expenditures for new vessels at the current time.
“All of these factors have created market place in which APL can no longer justify the continued operation of the C10 class vessels in the SZX service,“ he said.
He said the C10s will be phased out of U.S.-flag service as they arrive in Singapore between June 5 and July 24.
Mensing said “These decisions are never made lightly and we know that each and every decision of this nature has an impact on each of you and your families. However, these difficult decisions are made in an attempt to better position the company and remaining ships for continued success.”
APL said it planned to scrap the four ships and there was no plan to replace the C10s. The carrier said it will continue to operate U.S.-flag ships under the U.S. Maritime Security Program, which provides a subsidy for U.S.-flag vessels.
Including the SZX, APL's Website indicates it has eight weekly U.S.-flag services
The C10 ships are historically important ships in the container shipping industry, because when they were built in 1988, they were the first “post-Panamax” containerships, too wide to transit the Panama canal.
“Experts scoffed at spending $100 million to build a ship incapable of transiting the canal, but the wisdom of the new design soon became evident,” said APL on its Website, noting that they were able to carry up to 30 percent more cargo than their predecessors.
Now their 4,300-TEU capacity seems almost quaint in an era in which Maersk is building its “Triple E” ships with capacity of 18,000 TEUs apiece. - Chris Dupin